A recent unsigned, undated, unpublished memo from the
Office of Retirement Services also explores costs from transitioning MPSERS to
a defined-contribution retirement system. The paper reiterates the three types
of costs listed by the SFA paper. These are:

Relatively small administrative costs
from setting up a new retirement system.[27]

There are a few key
differences between this memo and the SFA report. There are slight differences
in the annual employer service costs. Under
the assumption that employees will mimic the contribution rates of employees in
MSERS, the ORS paper reports that the
defined-contribution plan would cost
an extra $9 million in the first year, $20 million in the second, and
$32 million in the third.[28] These
annual costs increase as more employees enter the defined-contribution
system after the defined-benefit system is
closed. The ORS’ reported costs are $2 million more, $4 million less,
and $6 million less than the figures in the SFA paper, respectively.[29]

Under the assumption that the employees would maximize
the employer’s matching contributions, the ORS memo reports that the state’s
costs would be $12 million more in the first year, $27 million in the
second year, and $42 million in the third year.[30] These costs are $3 million more,
$1 million less, and $3 million less than the SFA paper,
respectively.[31]

Because the ORS paper is more recent and unfunded
liabilities have grown since the SFA published its analysis in 2009, the ORS
reports an increase in the cost of conforming to a closed system’s level-dollar
schedule to catch up on MPSERS’ unfunded liabilities. The total first year
costs are $360 million in the ORS report[32]
— $152 million higher than the SFA paper.[33]

The SFA and ORS reports provide similar estimates on
the costs of setting up a defined-contribution retirement plan; the numbers, at
most $8 million to $10 million, are relatively small in comparison to
the calculated increase in cost for the unfunded liabilities.[34]